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Saying ‘NO’ Improves Returns

Something I realized a while ago is that I spend most of my time saying ‘NO’. Management teams, advisors, sponsors, DA’s, analysts and even other market participants pitch their investment ideas, companies, listings, potential listings, IPO’s and research at you constantly, and, unfortunately, most of them are not worth investing into.

I haven’t even touched on the endless streams of journalists, pseudo-journalist-types, TV presenters, talking heads, and mass media with social media hooks that pump out trade and investment ideas on a daily basis…

In reality, most of this is noise and most of it should not be invested in.

Just because a stock is listed, doesn’t mean you should invest in it? Just because a business plans to list or is listed, doesn’t mean it is a good business? Just because a journalist can get his writing into print or on a website, doesn’t mean he or she knows what they are talking about or is worth listening to? Just because a person can get themselves cast onto a TV, doesn’t mean that they are worth listening to?

By all means, read the articles, meet the management teams and chat to the analysts, and so forth. This is what research is. You never know which meeting or report or article is pure gold until you have taken or read or worked through it.

Consider the fact that in AWSM Fund, we target to hold only 15 to 20 stocks. There are nearly 400 listed on the JSE, which means that we are literally saying ‘NO’ to at least 380 of them.

And I do believe that we are better for it.

You make your returns in the stock market in both the decision in what to invest in and in what to avoid.